Economics Development Impacts High Speed Rail

Tom Kayo

TMLT601, I001, Fall 15

American Public University

Emmet Fritch

December 26, 2015

Abstract
This paper premise is the economic development impacts of transportation in general, as examined by Kumares, Sinha & Labi (2007). Multiple studies have revealed that investments in public transportation ultimately drives productivity and economic growth (Kumares, Sinha & Labi, 2007). This paper however will move away from highways and most common types of transit systems to focus on high speed rail and its potential economic development impacts in the United States. By examining additional resources such as World Bank analysis, papers from the MIT library, and reports from non-profit advocacy groups, this paper seeks answers on why a project with tremendous economic benefits has not yet happened in a country known for always being first when it comes to leading in innovation and economic development.

Introduction In Kumares et al.’s. (2007), two types of transportation impact on economic development are listed. One is the impact on the overall economic development, driving income and jobs, for instance, and the other is the positive effect on investment, property appreciation and tax revenue. All of this correlates with higher wages and better communities. At the same times, when looking at other developed and emerging countries, like countries of the European Union and China for example it’s quick to notice that they have invested in high speed rails, something the United States has not yet embraced. Which is somewhat of a paradox considering that United States is a nation of technology innovation and economic excellence. The following line will assess the economic developments impacts of high speed rails in China and Europe, then examine the status of the US high speed rail project from both proponents and opponents perspectives, then finally take an objective look at the project and evaluate signs of progress in that regards.

Economic benefits High speed rails in other countries * Europe A study written by Roger Vickerman (2004) of Centre for European, Regional and Transport Economics titled Indirect and wider economic impacts of High-Speed Rail illustrates how high speed rail has enhanced competitiveness, productivity and driven additional infrastructure development within countries of the European Union.
Paris and London are just two hours apart via Areas in the North of France that until the construction of the high speed rail were very poor, remnant of old coal factories of the end of the 19th century have seen an exponential economic growth just for being on the way of the high speed rail (Vickerman, 2004). A person could live in Brussels, Belgium and go to work in Paris, France, just one hour away via TGV (train a grande vitesse or high speed train in English). Today, several major economic powerhouses of Europe are linked through a network of high speed rail. Turin, Barcelona, Paris, Brussels, Köln, Amsterdam, London now form a solid economic circuit. It is common for tourist visiting Paris to decide to also visit London or other cities linked just because it’s accessible. It’s believed that revenue generated from tourism just due to accessibility via high speed rail has increased by over 100% in the past three decades (Vickerman, 2004). So let’s imagine if a tourist visiting Las Vegas, could also be just one hour away from the Grand Canyon or Disneyland. Asian countries such as Japan, South Korea and China have also invested in high speed rail. * China The case of China is a bit different than Europe. Regional Economic Impact Analysis of High Speed Rail in China is a report published by the World Bank in June of 2014. The study finds that although high speed rail did not result in reduce transportation costs (due to the fact that China is a communist country and government controls pricing as opposed as pricing being dictated by the free market), it did have a tremendous on economic productivity in the areas where it was built. As a result, these areas of China which is still a mainly rural country saw more infrastructure developments and better access to other services such as internet. As more rural Chinese left for the bigger cities, those who returned brought back new ideas and items that might not have been accessible in these rural areas before. Moreover the report found that due to the fact that distance between major economic hubs in China was considerable reduced, the number of business related travelers increased by about 70%, contributing to making China become the second largest economy in the word. So if investing in high speed rail has worked in Europe and in China, why not in the United States? * United States The Obama administration made high speed rail development one of its priorities as early as 2009. The idea according to the Federal Railway Administration (2009), was that increased security measures in airports, higher fuel costs as well as congested highways and airports would make high speed train a more suitable option for travelers. In addition to that, in the midst of the great recession, it would create much needed jobs. Six years later, not a lot of progress has been made and this for multiple reasons including political ones. So what exactly is stopping this project from advancing? Are there actual economic benefits for the US? High speed rail project in The United States * Overview The debate over high speed rail is not new in the United States. As a matter of act it started right after WWII, when President Lyndon B. Johnson signed the High Speed Ground Transportation Act of 1965, which at the time had the particularity of receiving bipartisan support in congress (US Library of Congress, 1965). This was dome part of President Johnson’s Great Society infrastructure building initiatives. Thus this is not something new. Over the past five decades, several attempts to concretize the project have fallen short. As of today, only California seems to be on track of realizing what will be the largest high speed rail project in the United States (Cahighspeedrail.ca.gov, 2013) That project in 2008 received approval from California voters through proposition 1A. Currently, there are similar projects in various states sand regions across the country but not moving as fast as California or not moving at all. * Opportunities
Right next to California, the cities of Phoenix, Denver, Salt Lake City and Las Vegas and Reno have joined forces to create XpressWest through the Western High Speed Rail Alliance (2009). The plan includes linking with California as well as Albuquerque and Santa Fe. The Ohio hub project is supposed to connect Ohio to Pittsburg, Detroit, and Toronto, Ontario (Ohio Department of Transportation, 2009). The South Central Corridor plan is to connect Dallas, Houston and San Antonio (Texas High Speed Rail Authority, 2010). Other projects include the Florida High Speed Rail and Midwest Regional Rail Initiative (Federal Railway Authority, 2010). All these projects present the same type of benefits and are viewed by lawmakers across the aisle as potential driver for economic developments. SO why haven’t progress been made? * Obstacles Many transportation or infrastructure projects tend to be delayed due to lack of funding. In 2009, as part of American Recovery and Reinvestment Act, the Obama Administration poured over $50 billion to various sates to fund high speed rail (Federal Railroad Administration, 2009). Additional funds were granted in 2010. However, Florida, Wisconsin and Ohio, states led by economic conservative governors rejected funding. One of the reasons was the fear of additional burden on taxpayer. Some of these funds ended up allocated to California thus helping accelerate its project. In 2011, Republican dominated congress rejected another plan to invest about $50 billion in passenger railway due to the fact that they preferred private sector investment as opposed to government funding (Reuters, 2011). The opposition therefore is not an opposition to the project itself, it’s rather an opposition on how to fund it, driven by ideological differences. It’s important to point out however, that a Gallup poll published in in 2010 showed that almost 60% of Americans were in favor of funding high speed rail through the stimulus of 2009 (Gallup, 2010).

Summary The US High Speed Rail Association (HSRA) is a nonprofit advocacy group that advocates for the construction of a fully integrated high speed rail system in the United States by 2030 (see map below). According to HSRA, the high speed rail could generate $19 billion and create 150000 jobs as described in the video linked below: http://www.elitegroup.tv/high-speed-rail/ In the meantime, California is making progress. According to the California Speed Rail Authority Los Angeles and San Francisco will soon be linked in about two hours. The success or failure of the California project might likely determine the fate of high speed rails in other areas. If it succeeds, liberal areas will continue to get federal funding and investors in conservative areas will have a proof of potential tangible ROI. It is equally important to note that ultimately, the California voter decided that they wanted that project to come to fruition. Other states should probably do the same.

Conclusion It is clear that high speed rail constitute enormous economic development benefits (Kumars, Sinha &n Labi, 2007). Europe has been reaping these benefits for the past three decades. Japan, South Korea and especially China have taken full advantages of the opportunities presented by high speed rail. The US is making progress as California high speed rail is on the way and some private consortium have expressed interest in piggy backing that to neighboring states. In conclusion, the benefits of high speed train are not only economical. In an era of environmental consciousness, if we high speed train would have the less impact of carbon footprint as it uses electric power and could be powered by alternative sources of energy EPA (2009).

References:

* California High-Speed Rail. (n.d.). Retrieved December 26, 2015, from http://www.epa.gov/sanjoaquinvalley/california-high-speed-rail

* High-Speed Rail Strategic Plan. (2009, April 1). Retrieved December 26, 2015, from https://www.fra.dot.gov/eLib/Details/L02833

* Kamares, K.C., & Labi, S. (2007). Transportation decision making: Principles of project evaluation and programming. John Wiley & Sons, Inc.

* Lyndon B. Johnson: Remarks at the Signing of the High-Speed Ground Transportation Act. (1965, September 30). Retrieved December 27, 2015, from http://www.presidency.ucsb.edu/ws/?pid=27281

* Poll after Poll: Americans Want Trains! (2010, February 8). Retrieved December 26, 2015, from http://www.garprail.org/documents/polls.pdf

* Regional Economic Impact Analysis of High Speed Rail in China. (2014, June 25). Retrieved December 26, 2015, from http://www.worldbank.org/content/dam/Worldbank/document/EAP/China/high_speed-rail- in-china-en.pdf

* US HIGH SPEED RAIL ASSOCIATION. (2010, May 15). Retrieved December 26, 2015, from http://www.ushsr.com/benefits/economic.html

* Vickerman, R. (n.d.). Indirect and wider economic impacts of High-Speed Rail. Retrieved December 26, 2015, from http://web.mit.edu/11.951/oldstuff/albacete/Course Reader/Transportation/High-Speed Tranist Literature Review/Vickerman.pdf *